It is probably a legacy feature from a time when plain text in a mono-spaced typewriter-like font was used on computers. Then you could fill in a form without shifting the field labels or box drawing symbols around. In plain text you often didn’t have any formatting and any lines or brackets were part of the same text. The text being overtyped also wouldn’t jump around because the replacement symbol always had the same width.
Today overtyping is used when editing raw data directly in a hex editor, where inserting and deleting is usually not desired.
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